GST: Pharma sales growth sluggish at 2.4% in Aug

A survey conducted in August by IT-enabled healthcare service provider QuintilesIMS says, according to chemists and stockists, the supply chain has not seen any improvement after GST.Rupali Mukherjee | TNN | September 16, 2017, 14:15 IST

Mumbai: The organised pharma retail market was impacted in August with the market registering a sluggish growth rate of 2.4% in the aftermath of the implementation of the GST in July. Though sales in August showed a slight recovery over the previous month, which was in negative territory at -2.4%, analysts say the slump may well continue over the next couple of months.

A survey conducted in August by IT-enabled healthcare service provider QuintilesIMS says, according to chemists and stockists, the supply chain has not seen any improvement after GST. Also, their business was impacted due to GST rollout, with teething problems expected to be sorted out over the next two months.

A majority of distributors and stockists have upgraded their software, while for chemists it’s still work in progress. The poor preparedness in terms of upgrading their system in line with GST, as well as destocking which is a natural fallout of the exercise, could be attributed to the sluggishness in sales. The situation continued well over the following weeks, with many stockists in a wait-and-watch mode.

With the 2.4% growth rate, pharma sales hit Rs 10,317 crore in August, with Zydus Cadila posting the highest growth rate at 15.7 %, followed by Mankind at 11.1% and Lupin at 8.9 %, according to pharma research firm AIOCD. The market was pulled down by anti-infectives (-8%), while dermatology medicines posted a double-digit growth rate of 12.7%. Gastro-intestinal drugs grew by 2.4%, while chronic therapies like anti-diabetic registered a double-digit growth rate (10.6%), though lower than July.

The cardio segment posted a single-digit growth rate for the month (8.1%), while therapy for central nervous system showed an improved growth rate of 5.6% compared to last month.

Growth was impacted in the first month of GST rollout, due to operational issues like difficulties in software updation, with stockist billing being hampered to a large extent.

The survey adds that though a majority of stockists received extra credit days and help from companies to switch to the new tax regime, chemists did not receive any financial or non-financial benefit from distributors.

During the last couple of months, at the retail level, chemists were not confident about getting tax refunds in time and, hence, were maintaining low stock levels, industry experts say. There was also lack of clarity in trade around the accounting of inventory, and how the input tax credit process will work and claims be processed.